Category Archives: Labour

GK Point of View – The Contested Future of the Apprenticeship Levy

GK Senior Adviser Robert Blackmore assesses the criticisms of the Apprenticeship Levy, from unspent funds to the over-provision of apprenticeships for affluent employees, and highlights the many contested proposals to reform the Levy.

While it may not dominate the front pages, the Apprenticeship Levy is fast becoming one of the more controversial areas of UK public policy. The Levy, which is charged at 0.5% of an employer’s total payroll, applying to those with a payroll of more than £3 million, is contested at several levels.

One major criticism of the Levy is that the Treasury has benefited to the tune of £3.3 billion between 2019 and 2022 from unspent funds. However, despite an unexpected uplift in the amount raised by the Treasury via the Levy, the budget allocated to the Department for Education (DfE) to facilitate the scheme has remained consistent, raising the prospect of overspend. Employers have raised concerns about transparency, with Anna Ambrose, Director of the London Progression Collaboration, stating that the “Treasury black hole” risked “undermining confidence that money for apprentices is being used in the most effective and fair way.”

Government officials, however, would argue that they are attempting to find a delicate balance between keeping to a pre-determined budget, whilst simultaneously ensuring that provision for priority skills areas is enhanced. Ahead of November’s Autumn Statement, it was reported that Number 10 and the Treasury were considering plans to limit the number of degree-level apprenticeships. Chancellor Jeremy Hunt was said to be concerned that too great an amount was being spent on level 6 and 7 apprenticeships that tend to be filled by older and more affluent employees.

This proposal faced opposition from the DfE, while course conveners argued that high-level apprenticeships were “critical for the productivity agenda and fiscal sustainability”. Employers also pointed out that the allocation of funds should be their preserve, noting that the Levy was established to be “employer led”. Ultimately, no such proposals were included in the Autumn Statement. Instead, documents published alongside the fiscal event highlighted how apprenticeships had become a ‘prestigious and high-quality alternative route to higher education’. Despite its omission, it remains a topic of contention within Government.

Outside Whitehall, the calls for reform grow louder. Earlier this month, EDSK, a think tank focused on education and skills, proposed an even more radical overhaul of the Levy. Its report, ‘Broken Ladders’, recommended that individuals who have already achieved an undergraduate degree should no longer be eligible to start a levy-funded apprenticeship. It was also suggested that employers should be prevented from accessing further levy funding if they have trained more apprentices aged 25+ than those aged 16-24. EDSK believe that such reforms would ensure that the focus of the Levy remains on those young people who have elected to pursue a non-academic pathway. Unsurprisingly, EDSK has faced criticism from training bodies, most notably from Mandy Crawford-Lee, Chief Executive of the University Vocational Awards Council, who argued that “we should dismiss the false notion that apprenticeships are the only suitable for school/college leavers unable to reach the ‘academic’ standards needed to take them to university.”

Furthermore, last week, the British Retail Consortium (BRC), the National Farmers Union (NFU) and UK Hospitality (UKH), alongside others, issued a joint statement calling for the Government to develop a wider skills levy, for businesses to train up a greater number of domestic workers to plug the UK’s skills gaps. Helen Dickinson, Chief Executive of the BRC, went as far as to state “The government should stop dragging its feet so businesses can upskill our workforce.”

This position aligns with the Labour Party’s stated aim to “increase the quality as well as quantity of training opportunities” through a “growth and skills levy“. Such an expansion of the Levy, however, has faced criticism from officials inside the DfE, who estimate that plans to expand the Levy would limit the number of apprenticeship starts per year to 140,000 (down from 349,000 in 2021/22) and cost an additional £1.5 billion. It should be noted, however, that this analysis has been labelled ‘quite simplistic’ by Stephen Evans, Chief Executive of the Learning and Work Institute.

A Labour victory at the next election, expected in 2024, would provide a mandate for a ‘growth and skills levy’, yet the party have yet to fully expand on their policy, and it is unlikely that the future manifesto will delve too deeply. Many will hope reform to the Levy is not lost in the maze that is nascent government policy making.

The King’s Speech

Conservative Party shapes political battlegrounds in bid to turn around polling deficit

The first King’s Speech by Charles III and the last before a General Election was noteworthy not for the 21 Bills announced, which will shape the upcoming legislative agenda, but what it revealed politically. Whilst in the short-term today’s ceremony is unlikely to move the dial, it did reveal the foundations upon which the Prime Minister and the Conservative Party will seek to fight the election upon.

The overarching theme was the Government’s commitment to reducing inflation and bringing down the cost of living. The language that accompanied this was ‘making decisions in the long-term interest.’ This is fundamental to the Conservative Party strategy. By next Autumn (the most likely timing for the General Election) household costs will have stabilised and the Party will say to the electorate that they are on the right track and now is not the time to change course. Expect the phrase ‘long term interest’ to feature even more prominently as we look ahead to the Autumn Statement later this month. In the most recent YouGov poll of the most important issues facing the country unsurprisingly the economy is far out in front of the public’s most pressing concerns.

Within the King’s Speech were numerous Bills related to law and order. This is an area of traditional strength for the Conservative Party, however, in recent times the Party has fallen behind Labour on the issue. The recent demonstrations in London and the potential for further action ahead of Armistice Day, the Conservative political machine may see this as an opportunity to push for a hard line approach that they believe will sit well with the majority of voters. The Economic Activities of Public Bodies Bill, which is designed to give ministers the powers to ban public bodies from imposing their own boycotts, divestment or sanctions campaigns against foreign countries is likely to be a focal point in this debate designed to further expose divisions within the Labour Party on conflicts such as Israel-Palestine.

The other major focus area, which wasn’t included as a Bill but was referenced by The King as a priority area for the Government is on the topic of immigration. The King said the Government would continue to crackdown on criminal gangs and control the boats crossing the Channel with the powers conferred to ministers in the previous Parliament. With almost 4 in 10 voters citing immigration as a top three issue the Government is determined that its efforts remain front of mind of voters.

So, with the pitfalls for Labour clear, how can the Party respond? Under the Shadow Chancellor Rachel Reeves we will continue to ensure fiscal discipline is the priority. By demonstrating a firm grip on public spending and fully costed policies, Reeves will hope to build up enough credibility that when she asks voters ‘do you feel better off after a Conservative government’ the reply will not only be ‘no’, but an electorate confident in voting for a reformed Labour Party. The Party will also feel they are on the right side of the argument when it comes to the transition to Net Zero with regards to the forthcoming Offshore Petroleum Licensing Bill, claiming the Government is failing to show leadership and is presiding over a period of ‘dither and delay’.

Labour are also likely to capitalise on the lack of health announcements in the speech despite the policy area trailing only behind the economy in voters concerns. Despite a bill promising to ban the sale of smoking to anyone born on or after 1st January 2009, there were no mentions of NHS reforms or bringing down waiting lists. Perhaps an acknowledgement that the Conservative Party have for now conceded on the issue.

The battle lines have been drawn. Today is the firing gun on the debates in Parliament and the media that are likely to play out between now and the election as the parties vie for your vote.

What can organisations looking to engage in the political process take from this? It is far less about the potential impact of these measures, which may or may not pass, but a guide to how you can align your organisation with the political agenda to ensure your voice is heard and to begin to positively influence the shape of the next Parliamentary session.

For more details on the State Opening of Parliament and the new session, speak to GK Associate Director, David Mitchell david.mitchell@gkstrategy.com

Party conference 2023

As the annual conference season draws to a close, possibly the last before a general election next year, the main political parties will be reflecting on the success or otherwise of the Manchester and Liverpool gatherings. Both conferences were attended by our political advisers, who reflect on Conservative and Labour conference below.

As with past conferences, the measure of success differs, this was Rishi Sunak’s first as Tory leader, a more stable but still divided party. Just a year ago Liz Truss led a chaotic prelude to her short time in No10 and this year’s collection of Nigel Farage (as journalist) and long awaited HS2 announcement wasn’t the best backdrop as the Prime Minister attempted to cast his leadership as a force for change. Contrast Liverpool and the balance of a Labour party consistently ahead in the polls, with a more united and coherent party than for the past decade – a gathering of Labour activists who were at pains not to be carried too high on the prospect of government.

In a change to the usual order, the Conservative’s met first. The ongoing saga of will they, won’t they with HS2 didn’t help Rishi Sunak’s first conference as party leader. While the Prime Minister’s team struggled to get a hold of the narrative over the three days in Manchester, the former leader and likely leadership hopeful, Liz Truss and Suella Braverman, were quick to try and seize the agenda. Where the party truly seemed united was on the importance of support for climate action, and this was reflected in the sheer number of well-attended fringe events giving serious attention to how the UK can credibly retain its status as a climate leader. The Conservatives, despite recent announcements seemingly backing away from climate policy, understand that this remains a key vote-winner. Cobbling together a sell-able vision for the climate to the electorate could be make-or-break for the party in any upcoming election.

Sunak’s conference speech, his most important as leader saw the Prime Minister attempt to create some separation between his premiership and what he referred to as the previous “30 years of a political system which incentivises the easy decision, not the right one”. This will be a tough balancing act in the months ahead of the upcoming election. The 30-years Sunak references encompasses not only former Labour leaders Tony Blair and Gordon Brown, but no fewer than five Conservative Prime Ministers. The key question going into an election year will be whether Sunak can create that separation and be given the opportunity to push forward with his ambitious reforms to education, or whether he will be rejected by the electorate as more of the same.

Keir Starmer’s speech embodied Labour conference in Liverpool this week. A leader and a party more at home with its values and a confident, clear, coherent, even hopeful message about Britain’s future – a decade of national renewal. The party wanted a clean conference, a solid platform speaking to business leaders and the wider public, the opportunity now to project Keir Starmer’s message for the country which faced down the shame of the Corbyn-era and proudly bound past Labour success with a party of service, building a new country over the next decade and beyond. The test now is for the party to successfully project the same confidence beyond Liverpool, and Westminster, to the country at large.